50% rise in house prices needed before crash

claz

meanmachine wrote:

Sure, that's a good point. London is well ahead of the game in this mad race to "absolute unaffordability".

I think the average wage is 30K to a 250K property, so yes, the capital could hit 1989 figures in the next 3 years.

meanmachine where do you get your figures from as my partner and i have a joint income of 30k however we only could get a mortgage for £125,000 and then we had a lot of savings to purchase a property for £140,000

Tassotti

think mm meant 30k average wage versus 250k average property price...not mortgage related

meanmachine_2

No I think Nasty has a good point - property is always valued at a level that makes it just too expensive.

Right now there is a premium on capital, offest by lower interest payments.

Previously it's been higher interest rates against lower capital (price of property).

All I can do is save what I can and hope the pendulum swings back to higher interest rates and lower capital costs. If it doesn't then I won't ever buy. Instead I'll wait and inherit.

By the way, for a few short years in the mid-late 90s it was extremely easy to buy. I know lots of people with poor wages who bought houses they couldn't hope to buy at today's prices. The reason they could do it was that there weren't any of these "investors" around. Property had just crashed and was seen as a dismal investment.

The problem now is this: at 100K 10 of my mates can buy a place. At 150K 5 of my mates can still afford to buy, the rest rent or live at home. At 200K (where we are right now), one or two people can afford to buy.

The higher your house goes the fewer people you can sell it on to, and/or the more stretched they are.

Homeowners are basically impoverishing an entire generation. They might not give a damn now, but they will soon when retail goes down the tubes and the service sector goes into recession. when that happens, what will there be to bail us out? Manufacturing? Nope.

zappahey

I much prefer Keynes' observation that

The market can remain irrational longer than you can remain solvent

Maybe just change the word solvent to patient

Wickedkitten

THE_PROPHET wrote:

I have been reading this discussion with great interest as good points are being made on both sides. However, there is one factor nobody has yet taken into account:

On the Day of Fools,
In the House of Fools,
HE is coming back!

What, is Jesus planning on coming back to magick up some affordable housing from toothpicks?

van_persie

NastyMatt wrote:

Van persie.. as I have answered all your questions before in previous posts I will not bore you/everyone else with going over old ground.

You have made your opinions known.. and I look forward to you sending me your house details when it is up for sale at Christmas in time for the market crash you are predicting next year.. i.e. putting your money where your etc

Matt

P.S. "Talk to even the most bullish economists and they'll tell you the same" - I have... they didn't... end of.

When did I say I'd be putting my house up for sale? Quite happy in it, thanks.
Also, I seem to remember you replying with pretty much the same prediction as me as to when the market would take a noticeable downturn, so are you now changing your tune? Maybe since chatting to those economists...
Good luck with your BTL portfolio!

NastyMatt

van_persie wrote:

When did I say I'd be putting my house up for sale? Quite happy in it, thanks.
Also, I seem to remember you replying with pretty much the same prediction as me as to when the market would take a noticeable downturn, so are you now changing your tune? Maybe since chatting to those economists...
Good luck with your BTL portfolio!

I did not have the same prediction as you. Ergo, I am not changing my tune. I predicted a slow down in the rise of prices not a downturn. Secondly, I never said you WERE going to put your house up for sale, I said I am looking forward to when you do - which will prove to me that you beleive in what you say.

Quite clearly you will not put it up for sale! But you WILL tell people that there is going to be a crash and they should hold tight. It's like gambling.. predictions mean nothing until you put your money on it... and you are not putting your money on it.

heathcote123

NastyMatt wrote:

What a ridiculous argument for wanting a crash.

Quite simply.. houses are NEVER reasonably priced. If they ever are.. I.. you.. Tassoti.. every one else will buy 3 places.

Matt

Thats just utter rubbish. I bought my first flat at just over 2 X my rather junior wage around 1998 sometime.

That same flat is now 'worth' 4 times my wage, even though I have doubled my income in that time !

It really wasnt 'hard' at all.

I certainly believe house prices will come down, as to the timescales though, that I'm not so sure of.

van_persie

NastyMatt wrote:

I did not have the same prediction as you. Ergo, I am not changing my tune. I predicted a slow down in the rise of prices not a downturn. Secondly, I never said you WERE going to put your house up for sale, I said I am looking forward to when you do - which will prove to me that you beleive in what you say.

Quite clearly you will not put it up for sale! But you WILL tell people that there is going to be a crash and they should hold tight. It's like gambling.. predictions mean nothing until you put your money on it... and you are not putting your money on it.

Matt,
I do not need to put my house up for sale or 'put money on it' in order to back up a prediction! That is the most ridiculous comment yet!
I will move house when I feel the time is right, thanks.

Apologies, I didn't realise you said 'a slow down in the rise' of prices, not a downturn. Then we are indeed at odds.

However, I have merely voiced an opinion that I think there will be a correction - along with many others. I also welcome any suggestions as to why there will not be. And how there could be a plateau/stagnation in house prices for many years. So far nobody, including you, has successfully argued why this might be the case. Please copy me a thread if I am wrong - I am new to this site.
Are you about to buy somewhere?
Is this why you're so intent on shouting down anyone who suggests there might be a correction?

NSR2

heathcote123 wrote:

Thats just utter rubbish. I bought my first flat at just over 2 X my rather junior wage around 1998 sometime.

That same flat is now 'worth' 4 times my wage, even though I have doubled my income in that time !

It really wasnt 'hard' at all.

I certainly believe house prices will come down, as to the timescales though, that I'm not so sure of.

You know you guys don't need to argue:
http://www.nationwide.co.uk/hpi/historical.htm

1)Download the UK house prices since 1952,
2)Draw graph of Price / earnings
3)Look at graph.
4)Realise that we've just peaked at 6X average earnings which is the highest its ever been, and its now falling back